City orders retrofit of 'tilt-up' concrete wall buildings; landlords admit action is necessary - but expensive.

Landlords admit action is necessary -- but expensive

The Los Angeles City Council last week passed an ordinance requiring that owners of pre-1976 "tilt-up" concrete wall buildings retrofit the structures to make them earthquake resistant.

Members of the real estate community said the retrofitting probably is necessary but will require the spending of millions of dollars by industrial and retail landlords, who are already hammered by high vacancy rates and can ill-afford the improvements.

"It's going to have a very negative effect on the owners," said Brad Luster, managing partner of Major Properties, an industrial real estate brokerage in downtown Los Angeles. "Whoever is paying for it is going to feel a very large impact in a bad economy, but it has to be done. A little pain now is better than a lot of pain later."

Warren O'Brien, general manager of the city's Department of Building and Safety, explained there are 2,100 buildings in Los Angeles that will be required to be retrofit by anchoring their walls to floors and roofs. He estimated the cost at $1 per square foot of building, although industry sources estimated the cost could run as high as $5 per square foot in smaller buildings. Luster noted that many property owners will "wait until the last minute" to have the work done -- they have two years to complete construction -- and the price will go up as the deadlines approach.

"There are very few firms that do the work, and fewer that do it well," Luster noted.

O'Brien said the work is necessary because tilt-up buildings -- constructed by pre-casting concrete panel walls and then lifting them into place in a vertical position -- are the second most hazardous type of buildings in earthquakes (the first being brick buildings, which earlier were required to be retrofitted to updated codes).

O'Brien said most of the tilt-up buildings in Los Angeles are in the San Fernando Valley. They include: industrial buildings, used as warehouses and for manufacturing purposes; large box retail stores, such as Home Depots, Price Clubs and K marts; and supermarkets.

"A lot of these buildings were damaged" in the Jan. 17 Northridge earthquake, said O'Brien. "We're talking in the hundreds."

He added that the new ordinance has been in the works at City Hall for more than a year but was difficult to pass before the quake because of the state of the economy.

"In a recession, it's not popular to come up with programs that cost people money," O'Brien said.

Glenn Rosten, vice president of the Greater Los Angeles Condominium Association, said he is concerned that the city is rushing to pass earthquake legislation without adequate research on its effectiveness.

The City Council last week also passed ordinances on the repair of broken chimneys and the repair/construction of masonry and concrete block walls.

"It seems incredible to me that they would have had time to consider whether these changes are necessary and have estimated what the effects of these changes would be. It scares me to think that before the dust even settles, they're passing laws," said Rosten. "The potential is that the expenses could be so great that owners will have to raise rents and tenants will leave."

But he added: "I'm not saying it's not worth harming the economy to save lives." That sentiment was shared by Howard Schwimmer, vice president at Daum Commercial Real Estate Services, who said the new ordinance on tilt-up buildings "sounds like a good idea."

"It's cheaper to do than pay earthquake insurance premiums. It makes sense," Schwimmer said. "It's a small price to pay to avoid damage to your buildings."

Luster suggested the city should sell bonds and offer low interest loans to landlords who can't afford to pay for the work immediately, especially those whose buildings are empty.

"You can just drive down the street and see a lot of empty buildings," he noted. Luster added that some landlords who have "triple-net tenants" -- those with leases requiring tenants to pay for all improvements and tax increases -- will most likely pass the costs of retrofitting along to their tenants.